Now rather than working with this number directly, we tend instead to

use the market risk premium, which is the amount by which we expect the market

portfolio of risky assets to outperform the risk-free asset on a per annum basis.

Now there's a lot of conjecture about exactly what this number should be.

With estimates ranging from 2% to above 8% per annum.

Indeed the wide range of market risk premium estimates is neatly demonstrated

by survey evidence collected by Fernandez Linares and Acin in their 2014 paper.

The researchers in this project asked over 29,000 people including academics,

managers, and equity analysts for their estimate of the market risk premium.

The results are astounding in their variety.

We see average responses from China on the order of 8.1%.

While in the UK the figure was closer to 5% per annum.